What a charade to witness--Premier Ralph Klein and Provincial Finance
Minister Pat Nelson extolling the virtues of balanced budgets and a "debt-free"
Province! Let no one be deceived.
A nation’s money supply comes into being through the action of the banks in
issuing loans or purchasing securities. The money supply is reduced through
cancellation when such loans are repaid or securities are sold.
Consumption is the end of the economic process and consumer income must
liquidate all financial production costs. Unfortunately, under existing
financial accountancy rules retailers must recover from consumer income all
currrent financial costs of production, including those of capital. It is all
cancelled as purchasing-power, although the life of real capital plant, for
which charges later must be made in consumer prices, extends far into the
future. The consumer is charged, appropriately, with capital depreciation–but,
wrongly, not credited with capital appreciation.
This premature cancellation of money leaves a widening gap between financial
costs and prices and consumer income distributed in any production cycle. This
deficiency of purchasing-power increases exponentially with the increasing ratio
of capital relative to labor. In order to "bridge" this gap, an increasing claim
against future income must be made in the form of exponentially growing
financial debt. The price-system is increasingly non- self-liquidating.
When the Provincial Government repays to the banks $3,000,000,000 of public
debt, what they do in effect is to send this money to oblivion, reducing the
money in the hands of the community and thus immobilizing an equivalent amount
of goods and services. Brilliant!
A balanced budget means in reality: (1) that the economy is static,
unless compensated by a net loss of real wealth through export of more
goods and services than we import (defined, strangely as a "favourable" balance
of trade), (2) that we currently consume everything we produce
including our capital (a patent absurdity), and (3) ultimately, that the
banks as issuers of financial credit own all real capital although the
community produces it.
None of the politicians of any party–or otherwise intelligent members of the
general public--seem to realize that under existing financial rules the economy
can only continue to function if the unavoidable inflating "floating debt" of
the community is converted to "fixed debt" in the form of expanding, unrepayable
and permanent public debt. None of these notables stop to consider, or care, who
really owns the public credit–the banks, the government, or the consuming
public.
The only [appropriate--added] way to restore liquidity to the price-system
and ownership of financial credit to the community, which alone produces the
nation’s real wealth, is to compensate the inherent deficiency of
purchasing-power by issue, without debt, of supplementary consumer income in the
form of universal consumer dividends and compensatory payments to effect lower
prices at retail level.
Yours sincerely
Wallace M. Klinck
Tel/fax (780)
467-4885
E-mail: wmklinck@shaw.ca
Letter to the medi
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